In Brief
The Challenge
Companies spend staggering amounts on compliance efforts—training programs, hotlines, and other systems designed to detect and prevent violations of laws, regulations, and company policies. Yet corporate misconduct is widespread.
The Cause
Too often compliance is treated as a legal box-checking exercise.
The Answer
Develop better metrics that link initiatives more tightly to specific compliance goals.
Millions of fraudulent accounts at Wells Fargo. Systemic deception by Volkswagen about its vehicles’ emission levels. Widespread bribery at Petrobras that damaged both the government and the economy of Brazil. While those corporate scandals made headlines in recent years, countless others failed to penetrate the global consciousness. According to the Association of Certified Fraud Examiners, almost half of all fraud cases are never reported publicly, and a typical organization loses close to $3 million in annual revenue to fraud. Furthermore, of the nearly 3,000 executives interviewed for EY’s 2016 Global Fraud Survey, 42% said they could justify unethical behavior to meet financial targets. Clearly, malfeasance remains deeply entrenched in private enterprises today.